The Board of Directors of Tata Motors Limited (TML) has approved the proposal of demerging its Commercial Vehicles and Passenger Vehicles businesses into two separate listed companies. The demerger will be implemented through an NCLT scheme of arrangement, with all shareholders holding identical shareholding in both entities.
The Commercial Vehicles (CV), Passenger Vehicles (PV+EV), and Jaguar Land Rover (JLR) businesses have demonstrated strong performance by implementing distinct strategies. The demerger is a progression of the subsidization of PV and EV businesses done earlier in 2022.
It will empower the respective businesses to pursue their strategies for higher growth with greater agility and accountability. While there are limited synergies between the CV and PV businesses, considerable synergies can be harnessed across PV, EV, and JLR, particularly in areas like EVs, autonomous vehicles, and vehicle software. Chairman N Chandrasekaran stated that the demerger will help Tata Motors better capitalize on market opportunities, enhance focus and agility, and provide superior customer experiences, better employee growth prospects, and enhanced value for shareholders.
